U.S. tech-focused ETFs tumbled Monday, as fears spread that China’s DeepSeek AI will grab market share from tech giants like Nvidia Corp. and Tesla Inc. that had been leading markets higher, and that its reportedly cheaper, faster processes will pull spending from the domestic semiconductor industry.
The tech-heavy $333 billion Invesco QQQ Trust (QQQ), whose top holdings include AI heavyweights Nvidia, Apple Inc. and Microsoft Corp. fell 2.7% while the $26 billion VanEck Semiconductor ETF (SMH) slid 8.7% after DeepSeek demonstrated it could create competitive AI models for $6 million—far below the billions spent by U.S. tech giants.
Nvidia shares plunged 12%, pulling down ETFs where it holds top positions. The stock makes up more than 20% of the Strive U.S. Semiconductor ETF (SHOC) portfolio and just over 18% of iShares Global Tech ETF (IXN) holdings, which fell 1.6% and 4.6% respectively.
A broad range of tech exchange-traded funds fell as investors grappled with DeepSeek’s potential to upend the artificial intelligence landscape. DeepSeek’s $6 million model has rattled semiconductor ETF investors by challenging the multi-billion dollar investments made by U.S. tech firms in AI development. The Kurv Technology Titans Select ETF (KQQQ) fell 3.1%, reflecting the broad impact across tech-focused funds.
At the same time, China-focused funds moved higher, along with volatility and consumer-focused sectors. The iShares China Large-Cap ETF (FXI) rose 0.6% and the KraneShares CSI China Internet ETF (KWEB) added 0.2%, etf.com data show.
The ProShares VIX Short-Term Futures ETF (VIXY) jumped 8.6% while the Consumer Staples Select Sector SPDR Fund (XLP) and Health Care Select Sector SPDR Fund (XLV) rose 1.3% and nearly 1%, respectively, according to etf.com data. Meanwhile, the Tech Sector SPDR ETF (XLK) dropped about 4%.
The GraniteShares 2x Short NVDA Daily ETF (NDV) soared more than 27% as Nvidia posted its largest single-day decline of 2025.
Meta and Microsoft, which each pledged $65 billion for AI infrastructure in 2025, fell 3.1% and 3.8%, respectively. These declines hit the KraneShares Artificial Intelligence & Technology ETF (AGIX), which holds Meta at 7.6% and Microsoft at 7.5%, pushing the fund down 3.5%.
Meanwhile, the Vanguard Communication Services ETF (VOX), with Meta as its largest holding at almost 23% followed by a 13% stake in Google parent Alphabet Inc., fell nearly 1%.